Should I have an inventory plan?

by | Jun 2, 2023 | Inventory Management, Order Management, Retailers, Suppliers

Don’t let inventory issues drain your profits. Costly errors in inventory management can have a variety of root causes, and those mistakes can add up quickly.

You might have an overstocking problem, with a large amount of product on hand that’s not selling like you had hoped and that is now taking up valuable warehouse space. Or you may have underestimated consumer demand for a certain product and are running into out-of-stock issues, wasted warehouse space and delivery delays. These problems accumulate over time, damaging your customer experience and impacting your bottom line.

The best way to avoid mistakes like these is by creating an inventory plan.

What is inventory planning?

Inventory planning is a strategy used by businesses in the supply chain to manage the items they sell, store and carry. An effective inventory plan relies on real-time and historical sales data, customer feedback and seasonal trends.

The goal of an inventory plan is to help suppliers and retailers make data-driven decisions, so they have the right amount of stock on hand to meet consumer demand without waste or warehouse delays. A plan is successful when it leads to minimized costs from over- or under-stocking and a positive customer experience.

Retailers and suppliers depend on one another to drive the supply chain. The inventory planning process is vital for this collaboration so all parties involved can achieve operational efficiency and customer satisfaction.

How can inventory planning help me?

In order to benefit your business, a successful inventory plan uses sales data to give you a good sense of consumer demand. Accurate, plentiful data can provide insight into how certain products are selling, seasonal trends, what customers think about your products and more.

A plan that uses customer demand data minimizes overstocks, reduces waste and frees up cash flow. You gain the flexibility to respond to market trends instead of tying up capital in unsold products.

Your sales will increase as you reduce out-of-stocks. With an effective inventory plan, you’ll have just the right amount of stock on hand to meet customer demand. Your customers will benefit from a good purchasing experience, especially if you’re well-prepared during peak selling periods. A great customer experience leads to loyalty and increased sales.

The best inventory plans are backed by robust data. With the insight granted by comprehensive sales data, you can create a plan for your inventory that reduces costs and helps you prepare for seasonal changes. Instead of getting bogged down in solving inventory issues, you can efficiently plan for the future, limiting the impact of unexpected supply chain challenges.

Where can I learn more?

The standardized analytics and dashboards from SPS Commerce can boost your confidence in collaborating with your trading partners. Learn more and develop your own inventory plan by visiting our educational resource page.

SPS Commerce Blog Team